In August 2026, the world's largest smartphone maker was turned down on a discount request by a Chinese memory maker that had only been founded a decade earlier. According to a report by South Korean outlet Digital Daily, Apple sought to negotiate lower prices with CXMT (ChangXin Memory Technologies) for memory chips destined for smartphones and the iPhone slated for release in fall 2026. CXMT's answer was no. The price it quoted was on par with, or even higher than, that of Samsung and SK hynix.
This seemingly minor collapse in negotiations symbolizes a broader shift in the dynamics of the semiconductor industry. From the 1990s through the 2010s, the history of the DRAM market was one of a "chicken game," in which buyers forced sellers into ruinous price competition. Now that dynamic is reversing: sellers set the prices, and buyers line up to pay them.
The Oligopoly Born of the "Chicken Game," and the Buyer's Negotiating Playbook
The history of the DRAM industry is a history of elimination through price destruction. In the mid-1980s, Samsung entered a DRAM market dominated by Japanese firms like NEC and Toshiba—which together held about 80% of global share—with an aggressive low-price strategy. Samsung adopted the stacked capacitor method, gaining an edge in yield and mass-production costs, and drove out competitors through price cuts that it accepted would produce losses. This "semiconductor chicken game" resulted in the collapse of Germany's Qimonda in 2009 and Japan's Elpida Memory in 2012.
Only three companies survived: Samsung, SK hynix, and Micron. Since 2013, this "Big 3" oligopoly has controlled more than 90% of the DRAM market. According to McKinsey's analysis, DRAM is fundamentally a commodity, with cost per gigabyte serving as nearly the sole point of differentiation. For buyers, the ease with which they could switch suppliers was the source of their bargaining power.
Within this structure, device makers honed a particular procurement strategy: citing the low prices of Chinese-made components as leverage in price negotiations with their existing suppliers. Chinese-made DRAM was positioned as "cheap but of uncertain quality"—useful primarily as a bargaining chip.
AI Demand Cracks Open the Oligopoly
Since mid-2025, a surge in investment for AI data centers has fundamentally reshaped supply and demand in the memory market. According to Deloitte's estimates, hyperscalers' 2026 capital expenditures will exceed $1 trillion, with roughly 30% of that allocated to memory. The overall memory market's revenue is projected to grow from about $220 billion in 2025 to approximately $890 billion by the end of 2026.
Samsung and SK hynix have concentrated their manufacturing capacity on producing high-margin HBM (High Bandwidth Memory). SK hynix will begin full-scale supply of HBM4 in the second half of 2026, and Samsung is also expanding five-year long-term supply contracts with data center customers. As a result, production capacity for commodity DRAM (DDR4, DDR5, LPDDR4X, and the like) used in PCs and smartphones has fallen into structural shortage.
DRAM contract prices rose 93–98% year-over-year in the first quarter of 2026, with a further increase of 58–63% forecast for the second quarter (TrendForce). In July 2026, the average contract price for the benchmark PC DRAM product (DDR5 8Gb) reached $24, the highest level recorded since tracking began (DRAMeXchange).
Amid this supply crunch, CXMT rapidly emerged as the key supplier of commodity DRAM.
CXMT's Rapid Rise: The "Fourth Force" in Numbers
CXMT is China's largest dedicated DRAM manufacturer, founded in 2016 in Hefei, Anhui Province. Its full-year 2025 revenue exceeded RMB 55 billion (about $8 billion), a roughly 130% increase from the previous year. In the first quarter of 2026, the company posted revenue of RMB 50.8 billion (about $7.5 billion) and net profit of RMB 33 billion (about $4.8 billion), swinging from a loss of RMB 2.8 billion in the same period the prior year to a solid profit.
| Metric | Q1 2025 | Q1 2026 | 2028 Forecast |
|---|---|---|---|
| Global DRAM share (by shipment volume) | 4.1% | ~9% | ~11% (Counterpoint Research) |
| Monthly wafer production capacity | ~240,000 wafers | ~320,000 wafers (target) | ~420,000 wafers (planned) |
| Flagship products | DDR4, LPDDR4X | DDR5, LPDDR5X, server DDR5 | DDR6, HBM3E |
| Technology generation gap (vs. Big 3) | ~3 years behind | ~2–3 years behind | Expected to narrow |
According to Counterpoint Research's estimates, CXMT became the world's fourth-largest DRAM maker by shipment volume in 2025. However, the firm's research director Hwang Min-seong notes that a global market share of 15% is a "threshold that must be crossed" to sustain long-term competitiveness. This is based on precedent: after Taiwanese DRAM makers' combined share fell below this level in 2008, they were unable to secure the capital needed for investment in leading-edge fabs, and ultimately fell to niche suppliers with roughly 3% share.
Sanctions Reversed the Procurement Dynamic
What underpins CXMT's negotiating power is not technological prowess or cost competitiveness—it's the structure of domestic Chinese demand.
In response to tightened U.S. export controls on China, Chinese companies including Huawei, Xiaomi, Alibaba Cloud, ByteDance, and Tencent have preemptively locked in CXMT's DRAM production capacity through long-term contracts, seeking to avoid the risks of procuring from overseas suppliers. According to a Korea Herald report, overseas sales account for a mere 2.79% of CXMT's total revenue, with its top five customers making up roughly two-thirds of its core business revenue. Nearly all of its customers are domestic Chinese firms.
According to Reuters, the price of CXMT's 64GB DDR5 server module (RDIMM) exceeds the roughly $1,240 at which Samsung sells the equivalent product. Even Huawei reportedly sought a price reduction from CXMT—and was refused.
This structure gave CXMT a decisive advantage in its negotiations with Apple. According to Digital Daily's report, CXMT cited its existing high-priced, long-term contracts with Chinese customers as grounds for refusing to lower prices for Apple. Even if Apple approached the negotiation assuming that "Chinese-made should be cheap," CXMT had a legitimate reason to reject that premise—it had already secured buyers for the same volumes at equal or higher prices.
The Vanishing "China Card" Reshapes Procurement Strategy
What this development signals is that the negotiating tactic long relied upon by the device industry has expired.
The conventional procurement strategy worked like this: obtain a low quote from a Chinese manufacturer, then press an existing supplier with, "Someone can supply at this price—can you match it?" Even with doubts about the quality and supply stability of Chinese-made memory, it was sufficient leverage for negotiations.
Now that CXMT's prices are on par with, or above, those of the Big 3, that lever no longer works. In fact, the opposite effect is unfolding. By pushing up the price floor for commodity DRAM, CXMT has effectively enabled Samsung and SK hynix to withdraw entirely from the low-margin commodity DRAM segment and focus on high-value-added HBM. An industry source quoted by Digital Daily said, "CXMT is effectively controlling the price floor of the commodity DRAM market."
In an August 2026 report, Jefferies analyzed that "it is unlikely Chinese DRAM/NAND makers will offer meaningful price cuts or competitive pressure in the near term. The industry will face a high-cost environment through the late 2020s."
Apple's Remaining Options and Political Risk
For Apple, the breakdown of negotiations with CXMT goes far beyond a matter of cost. According to TechInsights' estimates, the 12GB of DRAM in the iPhone 17 Pro costs about $39, but that could rise to $145 in the iPhone 18 Pro. NAND flash costs are also expected to climb from $13 to $51. The overall increase in component costs amounts to roughly 25%, and the iPhone 18 Pro's retail price is expected to rise from $1,299 to $1,399.
At Apple's July 2026 earnings call, Tim Cook described the surge in memory prices as "a 100-year flood on memory pricing," adding, "Unfortunately, price increases are unavoidable."
Apple has already begun qualifying CXMT chips for use, and according to Bloomberg, Tim Cook himself has directly negotiated with Trump administration officials including Treasury Secretary Scott Bessent, seeking permission to use CXMT-made memory—limited to devices sold in the Chinese market. However, CXMT is listed on the U.S. Department of Defense's 1260H list (a list of companies suspected of ties to the People's Liberation Army of China), and there had also been discussion of adding it to the Commerce Department's Entity List. House Select Committee on the CCP Chairman John Moolenaar told the Financial Times that "it would be a serious mistake for Apple to partner with a Chinese military company."
Legally, there is no regulation prohibiting Apple from purchasing chips from CXMT. But given the political risk, even if Apple were able to adopt CXMT-made memory, it would likely be limited to products intended for the Chinese market.
A Ceiling on Production Capacity, and an Equilibrium Not Yet in Sight
CXMT's production capacity also faces structural constraints. U.S. export controls restrict access to the EUV lithography equipment (made by ASML) essential for advanced DRAM manufacturing. According to Omdia's estimates, CXMT's monthly wafer production capacity had been stuck at around 240,000 wafers. While an expansion to 350,000 wafers is planned by the end of 2026, some have pointed out that delays in equipment procurement could push part of this back.
Even so, the supply-demand crunch is expected to persist for the time being. Samsung has said that "nearly all customers are seeking multi-year supply contracts," and SK hynix has completed contract negotiations with about 10 companies. New production capacity is not forecast to come online until 2029–2030, meaning elevated memory prices are likely unavoidable until then.
The single fact that CXMT refused Apple's discount request symbolizes a broader realignment of power within the semiconductor supply chain. The era in which buyers set the price and sellers simply complied is over—at least in the commodity DRAM market. The question going forward is not how long this seller's market will last, but what new procurement structures buyers will be able to design in response.